Price of gold could fall below $800 an ounce over a long-term horizon, a drop of some $500 from its current level of $1,294 an ounce, Duke University's Campbell
He said investors mulling the price of gold should focus on demand rather than supply, which he said was " amazingly constant" .
A slowdown in growth in China, as evidenced in data released on Monday which showed that growth had slowed to 7.5 percent, was one potential indicator of lower gold demand.
" China is a demander of gold, lower growth there means lower demand," Campbell said.
Indian Rupee at all time
Low of Rs. 53.51/$. It is believed that RBI intervenes currency market to
suppress Rupee if REER index approaches 105 & props Rupee up if REER gets
close to 95. REER above 100 indicates relative strength of the currency. REER
levels as on 25 Aug 2011 was of 117.01 implies that rupee is weaker compared
with the base year of 2004-05.
In 1973, Gold
held by US central bank was 8,584 tones & currency in circulation was $61
billion. Dividing the gold held by the currency in circulation, we get a ratio
of 140.2 for that year. i.e. 140.2 tones of gold were held per $1 billion of
currency in circulation. In the year 2007, US central bank held 8,133 tons of
Gold & the money in circulation was whopping $759 billion. The ratio comes
to 10.7 .i.e. only 10.7 tons of gold held per billion dollars in circulation.
If the US were to get back to the 1973 ratio of gold held per billion $ in
circulation, it would have to increase its Gold Reserve to whopping 1,07,153
tons from current 8,133 tons, an increase of more than 13 times in potential
demand. With the financial crisis not over yet, Central Banks like FED would
continue to inject more & more money into the financial system. Thus the
debasement of currency will continue, making real asset like GOLD & SILVER
more & more attractive as a hedge against reducing purchasing power &
loss of faith & confidence in paper currencies. We should thank GOD that US
does not have a printing press for Gold. The YELLOW metal may be the only
Savior of our wealth over longer term. That sure makes a case to buy GOLD. As
far as our INIDA is concern, India M3 supply as on July 16 2010 was...READ HERE
FOR MORE -
A rising price for the precious metal has in itself generated more and more demand from investors looking for a way to hedge against a fresh recession. Gold bears no yield and is uncompetitive in an environment of rising interest rates.
The uneasy outlook for inflation, hard currencies and global growth has triggered a five-fold increase in a physical gold fund launched by Pictet one year ago, the Swiss private bank said.
UBS's Mr Stadler said the precious metal has become a staple of investors' portfolios, despite questions about whether it makes for a smart long-term investment.
Anthony DeChellis, managing director of Credit Suisse's Americas private banking unit, said at the Reuters summit in New York that clients are more interested in capitalising on the rise in gold prices than using the precious metal as a safe-harbour investment.
Andreas Wolfer, head of private banking at UniCredit Group, attributed the run-up in the price of gold to frayed investor nerves after the 2008 financial crisis as well as concerns about sovereign debt in the euro zone. -- REUTERS
A man holds a 250g gold bar. -- PHOTO: REUTERS
GENEVA - THE world's wealthiest people have responded to economic worries by buying gold by the bar - and sometimes by the ton - and by moving assets out of the financial system, bankers catering to the very rich said on Monday.
Fears of a double-dip downturn have boosted the appetite for physical bullion as well as for mining company shares and exchange-traded funds, UBS executive Josef Stadler told the Reuters Global Private Banking Summit.
'They don't only buy ETFs or futures; they buy physical gold,' said Mr Stadler, who runs the Swiss bank's services for clients with assets of at least US$50 million (S$65.7 million) to invest.
UBS is recommending top-tier clients hold 7-10 per cent of their assets in precious metals like gold, which is on course for its tenth consecutive yearly gain and traded at around US$1,314.50 an ounce on Monday, near the record level reached last week. 'We had a clear example of a couple buying over a ton of gold ... and carrying it to another place,' Mr Stadler said. At today's prices, that shipment would be worth about US$42 million.
Julius Baer's chief investment officer for Asia is also recommending that wealthy investors park some of their assets in gold as a defensive stance following a string of lacklustre US data and amid concerns about currency weakness. 'I see gold as an insurance,' Van Anantha-Nageswaran said.
Billionaire financier George Soros, echoing comments from investment guru Warren Buffett, last month described gold as the 'ultimate bubble' because it is costly to dig up and has no real value except its market price. -- REUTERS
Gold & silver are the only 2 real money in the world, the paper money that we use are all currencies, as explained by Micahael Maloney, author of "Guide To Investing In Gold & Silver".
Which nation has largest monetary gold reserves? Take the Rediff Business Quiz and see how much you know about the history of gold
Biz Quiz is best viewed in Internet Explorer (IE) and Netscape above version 6.0.
1. When did the famed Gold Rush begin? a) 1848 b) 1849 c) 1852
The correct answer is 1848.
In January of 1848, James Marshall had a work crew camped on the American River at Coloma near Sacramento, California, in the United States. The crew was building a saw mill. On the cold, clear morning of January 24, Marshall found a few tiny gold nuggets. Thus began one of the largest human migrations in history as a half-million people from around the world descended upon California in search of instant wealth. The first printed notice of the discovery was in the March 15 issue of The Californian in San Francisco. Shortly after Marshall's discovery, gold was discovered in the Feather River and Trinity River. The Gold Rush was on in full swing soon.
2. In 2003 who was the biggest gold exporter to India? a) United States b) Switzerland c) South Africa
The correct answer is South Africa . Following liberalisation of import controls on gold, India is looking beyond Switzerland and UAE and sourcing more and more of the precious metal from countries like South Africa, Australia and Hong Kong. South Africa exported gold worth Rs 8,272 crore to India in 2003, compared to Rs 4,794 crore during 2002. In doing so, South Africa has dethroned Switzerland as the biggest exporter of gold to India. India's gold import bill for 2003 was Rs 18,607 crore.
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3. Who is the world's largest gold producer? a) United States b) South Africa c) Australia
The correct answer is South Africa. South Africa has enormous gold ore reserves, estimated at 40,000 tonnes, representing 40 per cent of the global reserves. South Africa's main gold producing area is concentrated on the Archaean Witwatersrand Basin. The Witwatersrand basin, which has been mined for more than 100 years, has produced more than 41,000 tonnes of gold. Gold is the largest mineral foreign income earner in South Africa, contributing 27.4 per cent in mineral revenues. The gold industry is also responsible for 56 per cent of South Africa's mine labour force.
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4. Which country has the largest monetary gold reserves? a) South Africa b) Australia c) Neither
! The correct answer is Neither. As far as national gold reserves are concerned, the United States owns the most gold followed by Germany and the International Monetary Fund. If we include jewellery ownership, then India is the largest repository of gold in terms of total gold within the national boundaries.
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5. Geologists of which country recently discovered huge deposits of gold? a) USA b) China c) Russia
! The correct answer is Russia. Russian geologist, Anatoly Zaitsev recently discovered huge gold deposits of around 1,000 tonnes in the southern region of Altai. Russia has been cited as one of the greatest unexplored gold regions and reportedly undiscovered reserves of various precious metals in northern Altai could be around 60 million tons. In addition Sukhoi Log, the second largest undeveloped gold deposit in the world could have around 1,029 tonnes of gold. Russia is now at the centre of attention of the big mining companies across the world. The earthquake-prone Altai region sprawls along Russia's border with Mongolia, Kazakhstan and China and is one of the country's biggest grain-producing areas
As I mentioned earlier, basing your outlook for any commodity on long-term prices leads to very misleading conclusions.
For example, take a look at this chart of historical silver prices (it also conveniently overlays the gold/silver ratio, displayed on the right scale).
Prior to the mid 1900's, gold was simply a store of wealth. That's all. Gold was money — often tied directly tied to major currencies like the dollar, and interchangable with many of them.
Back then, gold wasn't used in everyday items like HDMI Monster Cables or iPhones.
Back in the day, industrial demand for gold was nill. You don't need the perfect electrical conductor, gold, which is highly malleable, resistant to corrosion, and shiny/pretty, until you have a huge market for electronics.
And as far as I can tell, gold as an ingredient in liquor is only a recent phenomenon.
Mr. Ameriks last point is probably the most interesting.
He says,
"The basis for making an investment in gold now is a conviction that the worst is yet to come."
I figured anybody who follows finance knew that the worst is yet to come. Another meltdown is simply inevitable.
States are broke, and the Feds are too. Entitlement programs are starting to buckle under the weight of baby-boomers. We're going to print our way out of this one, and it will not be pretty.
All these things are why I own gold stocks, and a little bullion too.
If you arent' sure where to start investing in gold stocks, I recommend reading this research report by my friend Luke Burgess.
In it, he explains how an Idaho gold miner secured the rights to millions of ounces of gold at $50 an ounce. Gold today trades for around $1200.
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